Moller-Maersk Net Profit Falls, Demand to Stay Subdued

The world's largest container shipping company A.P. Moller-Maersk A/S Friday posted a smaller-than-expected drop in first-quarter net profit, supported by increased freight rates and efficiency measures at its main shipping unit, but said it expects container transport demand to remain subdued this year amid "challenging" conditions.

Last year's earnings were boosted by the settlement of a tax dispute in Algeria.

The Danish shipping and oil conglomerate said it is maintaining its full-year guidance, expecting a result for 2013 below that of 2012 of $4 billion, while the net result excluding exceptionals is expected to be in line with the 2012 figure of $2.9 billion.

"Global demand for seaborne containers is expected to increase by 2%-4% in 2013, lower on the Asia-Europe trades but supported by higher growth for imports to emerging economies," the company said.

Indications for the first quarter of 2013 "show modest improvements in the global demand for container transport, reflecting the weak economic situation, especially in developed countries."

"Demand is expected to stay subdued in 2013 while capacity will grow significantly. Accordingly, conditions for the container industry remain challenging and managing supply will be even more important this year," it said.

The company posted a first-quarter net profit of 4.01 billion Danish kroner ($693 million), beating analyst expectations of DKK3.4 billion. In the year-earlier period, the company recorded a net of DKK6.15 billion.

Revenue was lower than expected, dipping 2% to DKK79.32 billion, from DKK81.31 billion in the year-ago period. Analysts had forecast revenue of DKK82.32 billion.

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Oil Futures Weighed by Demand Worries, OPEC Output

Oil futures settled lower for the third straight session, weighed by concerns over weakening demand in China and robust global production.

Futures headed lower after data released Monday showed Chinese industrial output in April came in at 9.3% above last year's level--an improvement over a tepid March reading but under the 9.5% forecast by analysts surveyed by The Wall Street Journal.

The report was the latest underscoring slowing economic growth in China, which in turn has left the oil market worried demand for crude-oil is slowing there, too. China is the world's fastest-growing large economy and the boom has fueled a rise in oil prices over the last several years.

"The Chinese data today started us off on the defensive," said Andy Lebow, senior vice president of energy futures at Jefferies Bache in New York. "We're going to really need some demand growth in the second half [of the year] to suck up the increased crude production."

Light, sweet crude for June delivery settled 87 cents, or 0.9%, lower at $95.17 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently settled $1.09, or 1%, lower at $102.82 a barrel.

Monday's fall is the latest decline in crude prices, as signs of strong supply in the U.S. and elsewhere keep a lid on gains. Year to date, crude futures have barely budged, up just 3.65% since the start of 2013.

On Monday, the Organization of the Petroleum Exporting Countries raised its strongest concerns yet this year about weakening oil demand in China. It cut its estimate for Chinese oil demand growth in the first quarter by 20,000 barrels a day, saying weaker-than-expected economic growth in China "may dent oil demand consumption."

Research service Platts estimated OPEC raised crude output by 25,000 barrels a day to 30.5 million barrels a day in April. The increase marked the end of a recent trend of lower production. The service said output had fallen by nearly a million barrels a day between October and March.

Platts said the increase was driven by higher output from Saudi Arabia, the biggest producer, and Iraq, the No. 2 producer. The group's next meeting in Vienna scheduled for May 31

Meanwhile, many oil-market observers remained concerned about the effect of a wind-down of monetary stimulus measures at the U.S. Federal Reserve. The Wall Street Journal reported on Friday that Fed officials had mapped out a strategy for winding down its $85 billion-a-month easing program.

An end to the measure would likely entail more support for the U.S. dollar, which typically weakens oil prices by making the commodity more expensive to global buyers.

The ICE Dollar Index, which tracks the greenback against a basket of currencies, was recently up 0.1% at 83.340.

Front-month June reformulated gasoline blendstock, or RBOB, settled 3.93 cents, or 1.4%, lower at $2.8210 a gallon. June heating oil settled 1.52 cents, or 0.5%, lower at $2.8910 a gallon.

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Nymex Crude Falls as Dollar, Weak Fuel Demand Weigh

Crude-oil futures fell Friday on a stronger U.S. dollar and new indications of sluggish global fuel demand.

Light, sweet crude for June delivery settled 35 cents or 0.4% lower at $96.04 a barrel on the New York Mercantile Exchange. Futures traded as low as $93.37 a barrel early in the session, but pared more than $1 of the early losses in the last half-hour of trading.

Brent crude on the ICE futures exchange fell 75 cents to trade $103.72 a barrel.

Futures were stung by gains in the dollar against its largest trading partners, which also weighed on broader commodities markets. The Dow Jones-UBS Commodity Index was recently down 1.1%.

Additionally, a report from the Organization of the Petroleum Exporting Countries suggested global oil demand remains weak.

"It was a whipsaw session," said Peter Donovan, a broker at Vantage Trading, who said that worries about China's growth and economic weakness in the euro zone have kept some investors on edge. "Some of the bulls are on the defensive."

In its monthly outlook, OPEC kept its 2013 oil-demand outlook unchanged from last month, when it predicted demand would increase by 800,000 barrels a day compared to last year. But the group said demand growth was weaker than expected in the first quarter, and warned that slowing growth in China and economic weakness in the euro zone are threatening to further slow the global economy.

"The OPEC report today is not encouraging for demand in the second half of this year," said Andy Lebow, an oil broker at Jefferies Bache in New York. "We need a significant increase in demand to get oil above the top of this trading range."

After rallying to end 2012, U.S. oil prices have been stuck below $98 a barrel since the beginning of the year, and fell as low as $86 in April.

Analysts and traders say that without an improvement in the broader economy, fuel usage will remain sluggish. And increasing production, particularly in the U.S., is leading to rising stockpiles.

U.S. oil inventories rose to 395.5 million barrels last week, the highest level in over thirty years. Additionally, output is increasing in Saudi Arabia, the world's largest oil exporter.

U.K.-based tanker tracker Oil Movements said Thursday that seaborne oil shipments from OPEC members will rise by 290,000 barrels a day in the four weeks to May 25, compared with the previous four-week period.

"This physical oversupply prevents prices from gaining at the moment," said Carsten Fritsch, commodity analyst at Commerzbank.

Front-month June reformulated gasoline blendstock, or RBOB, settled 2.48 cents, or 0.9%, lower at $2.8603 a gallon. June heating oil settled 1% lower at $2.9062 a gallon.

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Oil Futures Weighed by Demand Worries, OPEC Output

Oil futures settled lower for the third straight session, weighed by concerns over weakening demand in China and robust global production.

Futures headed lower after data released Monday showed Chinese industrial output in April came in at 9.3% above last year's level--an improvement over a tepid March reading but under the 9.5% forecast by analysts surveyed by The Wall Street Journal.

The report was the latest underscoring slowing economic growth in China, which in turn has left the oil market worried demand for crude-oil is slowing there, too. China is the world's fastest-growing large economy and the boom has fueled a rise in oil prices over the last several years.

"The Chinese data today started us off on the defensive," said Andy Lebow, senior vice president of energy futures at Jefferies Bache in New York. "We're going to really need some demand growth in the second half [of the year] to suck up the increased crude production."

Light, sweet crude for June delivery settled 87 cents, or 0.9%, lower at $95.17 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently settled $1.09, or 1%, lower at $102.82 a barrel.

Monday's fall is the latest decline in crude prices, as signs of strong supply in the U.S. and elsewhere keep a lid on gains. Year to date, crude futures have barely budged, up just 3.65% since the start of 2013.

On Monday, the Organization of the Petroleum Exporting Countries raised its strongest concerns yet this year about weakening oil demand in China. It cut its estimate for Chinese oil demand growth in the first quarter by 20,000 barrels a day, saying weaker-than-expected economic growth in China "may dent oil demand consumption."

Research service Platts estimated OPEC raised crude output by 25,000 barrels a day to 30.5 million barrels a day in April. The increase marked the end of a recent trend of lower production. The service said output had fallen by nearly a million barrels a day between October and March.

Platts said the increase was driven by higher output from Saudi Arabia, the biggest producer, and Iraq, the No. 2 producer. The group's next meeting in Vienna scheduled for May 31

Meanwhile, many oil-market observers remained concerned about the effect of a wind-down of monetary stimulus measures at the U.S. Federal Reserve. The Wall Street Journal reported on Friday that Fed officials had mapped out a strategy for winding down its $85 billion-a-month easing program.

An end to the measure would likely entail more support for the U.S. dollar, which typically weakens oil prices by making the commodity more expensive to global buyers.

The ICE Dollar Index, which tracks the greenback against a basket of currencies, was recently up 0.1% at 83.340.

Front-month June reformulated gasoline blendstock, or RBOB, settled 3.93 cents, or 1.4%, lower at $2.8210 a gallon. June heating oil settled 1.52 cents, or 0.5%, lower at $2.8910 a gallon.

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Nymex Crude Futures Settle at Fresh 2013 Low on Demand Woes

Oil futures extended their recent losses Wednesday, hitting their lowest level all year in the U.S., as investors focused on falling gasoline demand in a weekly report on domestic crude stockpiles.

The Energy Information Administration said its measure of demand for the motor fuel fell 1.1% to 8.3 million barrels a day during the week ended April 12, the lowest level for that week in 16 years.

The decline in demand follows weeks of disappointing economic headlines, which have damped sentiment about oil demand.

"Demand is weakening and looking at the economic numbers of the last few weeks we knew that was going to happen," said Carl Larry, president of Oil Outlooks and Opinions, an energy newsletter.

Light, sweet crude for May delivery settled $2.04, or 2.3%, lower at $86.68 a barrel on the New York Mercantile Exchange, the lowest finish yet this year. Brent crude on the ICE futures exchange recently declined $2.11, or 2.1%, to $97.80 a barrel.

The disappointing gasoline demand figure is the latest sign that demand concerns have captured the focus in the oil market, particularly in the wake of disappointing economic data out of the U.S. and elsewhere.

In recent weeks, the International Energy Agency, the Organization of the Petroleum Exporting Countries and the Energy Information Administration all cut their outlook for 2013 oil demand growth. Nymex crude has fallen more than 10% since a recent high in February, while Brent has shed more than 15% since February.

"Demand, especially in Europe, is going to continue to be poor," said Andy Lipow, president of Lipow Oil Associates, a Houston consultancy. "That and stagnant growth in the U.S. Those are weighing on the market."

Analysts at BNP Paribas were the latest market observers to cut their oil-price forecast, citing the recent market downturn. The analysts cut their 2013 average forecast for Nymex crude to $95 a barrel from $100 and cut their Brent outlook to $108 from $115, though they said prices could recover later in the year.

The EIA said oil stockpiles last week dropped 1.2 million barrels last week, marking a retreat from a 23-year high. Analysts surveyed by Dow Jones Newswires were calling for an increase of 900,000 barrels. Gasoline stocks fell 600,000 barrels, while stocks of distillates--including heating oil and diesel--jumped 2.4 million barrels.

Refinery utilization fell 0.5 percentage point to 86.3% of capacity.

Analysts expected U.S. gasoline stockpiles to fall by 500,000 barrels, while stocks of distillates were forecast to fall by 500,000 barrels. Refiners are expected to keep operations unchanged.

Front-month May reformulated gasoline blendstock, or RBOB, settled 5.28 cents, or 1.9%, lower at $2.7290 a gallon. May heating oil settled 7.19 cents, or 2.6%, lower at $2.7346 a gallon.

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Crude Oil Settles Lower on Weak Demand; Brent falls to 9-Month Low

Crude-oil futures prices fell sharply Friday, hit by growing worries over rising U.S. oil supplies and slowing growth in global oil demand.

ICE North Sea Brent crude-oil futures, a key global benchmark, dropped for a third straight day, settling at a nine-month low.

Traders said Brent is under pressure from continued worries about weakness in European economies and reduced demand caused by refinery maintenance in Europe and Asia, along with growing competition from rising U.S. oil output.

U.S. benchmark oil futures settled at five-week lows as crude oil inventories have risen to their highest level since July 1990, even as domestic refiners have lifted crude oil processing rates to the highest early April level in eight years. Those busy processers are increasing supplies of gasoline, erasing concerns about tight supplies ahead of the peak spring-summer driving season, which looks to be stuck in reverse this year due to weak demand.

Government forecasters, while warning of a slowdown in the growth of global oil consumption, expect demand for gasoline --the most widely used petroleum product in the world's biggest oil consumer--to slip to a 12-year low in the peak season. The EIA said U.S. vehicles' increased miles per gallon more than offsets the expected rise in miles traveled, the EIA said.

Spurred by the weak outlook and news that inventories in the key East Coast region now top five-year averages, traders slashed gasoline futures by 14 cents as gallon over the past three sessions, leaving prices at a three-month low on Friday.

"It's simply a supply-demand situation," said Dan Flynn, an analyst at Price Futures. "We've basically got more supply here than we know what to do with."

Light, sweet crude oil for May delivery on the New York Mercantile Exchange settled 2.4%, or $2.22 lower, at $91.29 a barrel, the lowest price since March 6.

ICE North Sea Brent for May delivery settled 1.1%, or $1.16 a barrel lower, at $103.11 a barrel, after an intraday low of $101.09 a barrel.

Forecasts this week from the U.S. Energy Information Administration, the Organization of the Petroleum Exporting Countries, and the International Energy Agency call for demand in the current quarter to drop by 180,000 to 400,000 barrels a day from the first-quarter level. That compares with a quarter-to-quarter rise at this time last year of 300,000 barrels a day, according the IEA, the energy watchdog of the major industrialized nations.

Tim Evans, analyst at Citi Futures, said prices have been hit hard by a "relatively consistent gloomy picture that is weighing on market sentiment."

Weak seasonal demand in the current quarter means, "there's simply no reason to anticipate a quick recovery," Mr. Evans said. "Demand and prices may rebound in the third quarter, but it will likely begin from a lower price level."

Analysts at Barclays said current oil-price weakness is "transient" and demand will pick up in coming months, as European refiners return from maintenance by late May and boost crude oil demand. Asian refiners are expected to wrap up seasonal work in June, providing a further lift for crude prices.

Lower global refiner demand for Brent comes as imported crudes are losing market share in the U.S. due to rising domestic output. PBF Energy Inc. said this week it plans to process up to 70,000 barrels a day of crude oil from North Dakota's Bakken shale oil region at its 190,000 barrels-a-day refnery in Delaware, a move which analyst said will lower crude imports, adding to pressure on Brent crude prices.

Gene McGillian, broker and analyst at Tradition Energy noted that U.S. crude prices have fallen by more than more than $7.50 a barrel since the April 1 high of $97.80, and said good part of the worries about the global economy may be factored into current prices.

"We may see a test of $90 a barrel, but I don't think the bears will get much more ferocious unless we get signs a further downturn," he said.

May reformulated gasoline blendstock futures settled 1%, or 2.92 cents, lower at $2.8018 a gallon, the lowest price since Jan. 18.

May heating oil futures fell 2.73 cents, to settle at $2.8719 a gallon, the lowest price since March 19.

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Crude Oil Slips as Demand Outlook Weakens

U.S. crude-oil futures fell Thursday as slumping gasoline prices and forecasts for weaker global demand weighed on the oil market.

Light, sweet crude for May delivery settled $1.13, or 1.2%, lower at $93.51 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell $1.60 to $104.19 a barrel.

Oil declined in tandem with gasoline futures, which settled at the lowest level since January as traders continue to flee from rising domestic supplies. Reformulated gasoline blendstock, or RBOB, has fallen 8.8% in April, and settled 3.41 cents lower Thursday at $2.8310 a gallon.

On Wednesday, the U.S. Energy Information Administration said U.S. gasoline stockpiles rose 1.7 million barrels last week. Imports to the U.S. East Coast rose 64% from the week earlier period to the highest levels since August, and stockpiles in this high-demand region are now 5.4% above the five-year average level for this time of year.

"You've got flat U.S. demand and growing production," said Andy Lebow, an oil broker at Jefferies Bache in New York. "The market's reached this moment, it's a moment of clarity" about high supplies, he said.

Oil futures have fallen for most of 2013, and after peaking in March U.S. gasoline prices have also tumbled. Refineries that shut down earlier this year for scheduled maintenance periods have started to ramp up operations, churning out more fuel despite tepid demand from drivers.

Weak gasoline demand is helping to lower prices at the pump. National average retail regular gasoline prices fell to $3.564 a gallon Thursday, according to the daily AAA Fuel Gauge Report. Prices are down from $3.703 a gallon a month ago.

Still, dimmer prospects for fuel use aren't confined to the U.S. The International Energy Agency, which represents a group of the world's largest oil-consuming countries, cut its forecast for 2013 oil-demand growth by 25,000 barrels a day to 90.6 million barrels a day due to falling fuel use in industrialized countries, particularly in Europe.

The IEA's revised outlook follows similar reports this week from the Organization of the Petroleum Exporting Countries and the Energy Information Administration. Both groups cut their forecasts for world oil-demand growth this year.

A weaker outlook on fuel usage this year, coupled with surging U.S. production and an improving supply outlook in other regions, is keeping a lid on global oil prices.

May heating oil settled 4.88 cents lower Thursday at $2.8991 a gallon.

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Wood Mackenzie: SE Asia to Drive LNG Demand Moving Towards 2025

Liquefied natural gas (LNG) suppliers looking to sell into Asia should increase their focus on the Southeast Asian region – predominantly Indonesia, Thailand, Malaysia and Singapore – as the LNG requirements of these countries is set to increase rapidly in the long-term, Wood Mackenzie said in a report Wednesday.

The combined Southeast Asian LNG markets will account for a third of overall Asian LNG demand growth by 2025, growing by 45 million tonnes per annum.

Of notable interest are Indonesia and Thailand; these two countries have been making large-scale investments into developing their LNG infrastructure both domestically and overseas.

In the case of Indonesia, the government is aiming to establish coal bed methane exploration and production technology; a segment which is completely new to the country. In January this year, special unit of upstream oil and gas, SKK Migas, revealed that it has approved an expenditure of $2.7 billion; a large portion of which is committed to drill 82 exploratory CBM wells.

In support of SKK Migas' vision to develop its unconventional capabilities, state-backed Pertamina allocated $437 million this year to develop its CBM assets, according to the company's work budget announced in December last year.

Pertamina spud the first of its CBM wells in one of its CBM production sharing contracts in Sumatra and Kalimantan, Pertamina's Director of Upstream Operations Muhammad Husen disclosed in an interview with Rigzone at the end of November. At the time of the interview, Pertamina was actively sourcing for 30 "fit-for-purpose" drilling rigs for the company's CBM exploration plans.

Commenting on Indonesia's CBM progress, Wood Mackenzie's Senior Gas Market Analyst Nicholas Browne noted in the report: "Indonesia will increasingly require LNG as we expect domestic demand to outpace domestic supply. Early CBM pilot well results in South Sumatra indicate that production will not meet previous expectations providing more headroom for LNG."

In Thailand, the country's need for LNG is poised to rise exponentially, in line with policy decisions drawn out to limit the scope for coal-fired power generation and increase use of gas-fired power plants. To meet its gas anticipated gas production needs, state-backed PTT Exploration and Production (PTTEP) offered new shares to a tune of $3.1 billion last year. The massive fund raising effort was made with the following twin aims: to finance PTTEP's acquisition of East Africa-focused natural gas company Cove Energy and enable the company to boost its natural gas reserves.

On Thailand's LNG prospects, Browne said in the report that the country's need for LNG imports will increase significantly after 2020, as indigenous gas and pipe imports will not be able to meet the country's demand for natural gas.

The LNG outlook for India less optimistic, as gas production from Reliance's D6 block has fallen from a peak of 20 billion cubic meters (bcm) in 2010 to 11 bcm in 2012. Wood Mackenzie forecasts production from D6 to continue falling, reducing the overall outlook for Indian gas production.

"This will constrain gas availability to the market, mainly impacting the power sector in the medium term. In the longer term, reduced production will preclude the development of greenfield fertilizer production as it is not economical to develop facilities purely based on LNG imports. In addition, LNG demand growth in other industrial sectors is further limited by reduced economic growth expectations," Browne said in an opinion statement on India's LNG prospects.

However, overall Asian LNG demand will still remain strong, as Southeast Asia will more than compensate for India's slower LNG demand growth. Furthermore, LNG demand expectations for Asia have strengthened in recent years due to the reduced long-term reliance on nuclear power in Japan and Taiwan; as well as an increased role for LNG to China's coastal provinces.

Summarizing, Browne said, "What's important in examining this shift in the growth balance is that it demonstrates that the outlook across Asia is dynamic. This highlights the presence of key uncertainties which may further shape the outlook for the region. These include policy issues in India; gas prices and power sector fuel competition in SE Asia; the pace of shale gas development in China and nuclear policies in Japan, South Korea and Taiwan."

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Crude Prices Fall on Lower Expectations for Global Oil Demand

Crude-oil futures edged lower Wednesday after a closely watched industry forecast cut estimates for global crude demand in 2013.

The Paris-based energy watchdog International Energy Administration projected that 2013 global oil consumption would grow by 840,000 barrels a day, or 90,000 barrels a day less than the group's estimate last month. The group pegs global consumption at 90.7 million barrels a day.

The IEA said predictions of higher oil use may be overly optimistic, particularly for China, the world's second-largest oil consumer. The report questioned whether a steep increase in Chinese imports in recent months would translate into higher long-term demand. Chinese crude imports jumped 6.1% in December and 7.4% in January, versus the previous year.

"The Chinese data has been better than expected, but people seem to be getting a little ahead of themselves with the optimism about Chinese demand," said Tariq Zahir, managing member of New York-based commodity fund Tyche Capital Management.

Light, sweet crude for March delivery settled 50 cents, or 0.5%, lower at $97.01 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 6 cents higher at $118.72 a barrel.

The IEA forecasts added uncertainty to the crude market, traders and analysts said. The projections came a day after the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration both raised their expectations for 2013 global demand.

"The IEA report was bearish, while the OPEC and EIA reports were both bullish, so what really matters now is Chinese economic data in the next few months," said Dominick Chirichella, an oil analyst at the Energy Management Institute in New York.

Separately, a weekly report from the EIA on Wednesday showed U.S. crude-oil inventories rose by 600,000 barrels last week, below the 2.3 million-barrel increase forecast by analysts surveyed by Dow Jones Newswires.

A smaller-than-expected increase in inventories points to stronger demand, but crude-oil prices fell after the report. Analysts said some in the market had been lulled into thinking the stockpiles would sharply decline after a survey by the American Petroleum Institute late Tuesday. That survey saw crude inventories plunging 2.3 million barrels.

"Given that we saw this huge drawdown from the API figures last night, people had been expecting something more like that," said Matt Smith, energy analyst at Summit Energy.

Also, the EIA report showed a 1.2 million-barrel drop in crude stockpiles at the oil hub of Cushing, Okla., indicating that a glut of oil in the Midwest may be easing.

The glut has put pressure on U.S. oil prices for the last two years as production from shale oil discoveries in the U.S. and Canada has flooded into the Midwest, which lacked adequate infrastructure to transport it elsewhere. That situation was exacerbated last month by problems with the Seaway pipeline, which carries crude from Cushing to key refiners in the U.S. Gulf of Mexico region.

"The bottleneck in the Seaway pipeline may not be as much of a problem as it was a couple weeks ago," Mr. Chirichella said.

Front-month March reformulated gasoline blendstock, or RBOB, settled 1.49 cents, or 0.5%, lower at $3.0354 a gallon. March heating oil settled 1.74 cents, or 0.5%, lower at $3.2188 a gallon.

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CNPC: China 2013 Oil Demand Expected to Rise 4.8%

China's oil demand in 2013 is expected to rise to 514 million metric tonnes, up 4.8 percent, a research institute affiliated with China National Petroleum Corp., the country's biggest energy producer, said Wednesday.

In an annual report, the CNPC Research Institute of Economics & Technology said oil demand is expected to "bounce back slightly" in line with a nationwide "economic rebound" this year.

China's economy slowed in the first three quarters of 2012 before recovering in the fourth quarter.

The CNPC affiliate didn't say how it calculated domestic oil demand or whether it included crude oil or refined oil products in the calculation.

Net imports of crude are expected to rise 7.3 percent to 289 million tonnes, or 5.8 million barrels a day, in 2013, it said. Dependence on foreign crude is expected to rise to 58 percent, it added.

Dependence on foreign crude was 57 percent in 2012, customs data showed.

The country's demand for refined oil products will rise 5.8 percent to 293 million tonnes, growing at a slightly faster rate than in 2012, CNPC said.

Output of oil products will rise 6.2 percent to 299 million tonnes.

China's apparent consumption of natural gas will rise 11.9 percent to 165 billion cubic meters, CNPC said, but didn't say how it calculated it.

Natural gas will account for 5.8 percent of the country's total energy mix in 2013, it added.

Natural gas imports will rise 23.8 percent to 53 billion cubic meters, mostly due to a rise in supplies from Myanmar.

Liquefied natural gas imports will rise 14.6 percent to 16.5 million tons, while natural gas imported via pipeline will reach 30 billion cubic meters, up 31.6 percent.

The combined domestic production of natural gas and coal-bed methane gas will reach 115 billion cubic meters in 2013, up 6.8 percent.

CNPC also said China's crude-oil refining capacity will grow 6.9 percent to 614 million tons in 2013. The country will process 489 million tons of crude in 2013, up 5.4 percent.

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Crude Tops $97/Bbl as Economic Data Boost Demand Hopes

NEW YORK--U.S. crude futures rose 1.2% Tuesday, pushing above $97 a barrel for the first time in more than four months as investors wager that signs of an improving economy will translate into higher fuel demand.

Oil has rallied 9.7% since early December, gaining momentum in recent days on a stream of data that pointed to improving economic conditions in the U.S., the world's largest oil consumer.

On Tuesday, Standard & Poor's Case-Shiller home-price index showed a 5.5% increase from last year. Last week, applications for unemployment benefits fell to a five-year low. Stock markets, used by oil traders to gauge economic sentiment, have also rallied to start the year. The Standard & Poor's 500 is up 5.7% in 2013.

Vikas Dwivedi, global oil and gas economist at Macquarie, forecast oil demand will rise by 875,000 barrels a day in 2013. But a speedier recovery of the global economy, due in part to the U.S., will mean a sharper rise in fuel use, he said.

"If in 2013 the various big economies of the world hit their stride, we could be well over a million barrels a day of demand growth. Then you have a pretty interesting market," Mr. Dwivedi said.

Light, sweet crude for March delivery settled $1.13 higher at $97.57 a barrel on the New York Mercantile Exchange, the highest since Sept. 14. Brent crude on the ICE futures exchange settled up 88 cents, or 0.8%, at $114.22 a barrel.

After a pipeline issue in the U.S. crimped oil's gains last week, analysts and traders said the focus has shifted back to the global economy. The outlook looks rosier--compared to last year when Europe's debt crisis and concerns about tax hikes and spending cuts in the U.S. made investors wary of betting big on economic growth.

"We're over the fiscal cliff and that kind of stuff, so the market is starting to go up on this economic optimism," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Investors have piled into bullish bets over the past two months, according to data from the Commodity Futures Trading Commission. Money managers' net-long position in oil futures and options is at the highest level since March.

Of course, some traders believe the market has rallied too quickly amid a still-tepid recovery, particularly as U.S. prices move back toward the key $100 a barrel level.

"We might see $100, but I don't think we'll hold above $100 in the short term," said Mark Waggoner, head of Excel Futures. "Demand just isn't there. There has got to be a stopping point."

Meanwhile, in the U.S. new pipelines are helping to bring oil stuck in the middle of the country to refineries on the coast, which is beginning to relieve a supply glut that has depressed U.S. crude prices compared to Europe's Brent crude.

The premium for Brent crude futures fell under $17 Tuesday.

Investors will be looking ahead to weekly data on U.S. oil and fuel stockpiles from the U.S. Energy Information Administration, due Wednesday at 10:30 a.m. EST, for further signs of oil demand.

Oil stockpiles are expected to rise by 2.7 million barrels, according to a Dow Jones Newswires survey of analysts. Gasoline stockpiles are seen rising by 200,000 barrels, while stocks of distillate, which include heating oil and diesel, are seen falling by 900,000 barrels.

The American Petroleum Institute, an industry group, is due to report its own stockpiles data at 4:30 p.m. EST Tuesday.

Front-month February reformulated gasoline blendstock, or RBOB, settled 3.86 cents higher at $2.9734 a gallon. February heating oil settled 4.76 cents higher at $3.1092 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Crude Tops $97/Bbl as Economic Data Boost Demand Hopes

NEW YORK--U.S. crude futures rose 1.2% Tuesday, pushing above $97 a barrel for the first time in more than four months as investors wager that signs of an improving economy will translate into higher fuel demand.

Oil has rallied 9.7% since early December, gaining momentum in recent days on a stream of data that pointed to improving economic conditions in the U.S., the world's largest oil consumer.

On Tuesday, Standard & Poor's Case-Shiller home-price index showed a 5.5% increase from last year. Last week, applications for unemployment benefits fell to a five-year low. Stock markets, used by oil traders to gauge economic sentiment, have also rallied to start the year. The Standard & Poor's 500 is up 5.7% in 2013.

Vikas Dwivedi, global oil and gas economist at Macquarie, forecast oil demand will rise by 875,000 barrels a day in 2013. But a speedier recovery of the global economy, due in part to the U.S., will mean a sharper rise in fuel use, he said.

"If in 2013 the various big economies of the world hit their stride, we could be well over a million barrels a day of demand growth. Then you have a pretty interesting market," Mr. Dwivedi said.

Light, sweet crude for March delivery settled $1.13 higher at $97.57 a barrel on the New York Mercantile Exchange, the highest since Sept. 14. Brent crude on the ICE futures exchange settled up 88 cents, or 0.8%, at $114.22 a barrel.

After a pipeline issue in the U.S. crimped oil's gains last week, analysts and traders said the focus has shifted back to the global economy. The outlook looks rosier--compared to last year when Europe's debt crisis and concerns about tax hikes and spending cuts in the U.S. made investors wary of betting big on economic growth.

"We're over the fiscal cliff and that kind of stuff, so the market is starting to go up on this economic optimism," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Investors have piled into bullish bets over the past two months, according to data from the Commodity Futures Trading Commission. Money managers' net-long position in oil futures and options is at the highest level since March.

Of course, some traders believe the market has rallied too quickly amid a still-tepid recovery, particularly as U.S. prices move back toward the key $100 a barrel level.

"We might see $100, but I don't think we'll hold above $100 in the short term," said Mark Waggoner, head of Excel Futures. "Demand just isn't there. There has got to be a stopping point."

Meanwhile, in the U.S. new pipelines are helping to bring oil stuck in the middle of the country to refineries on the coast, which is beginning to relieve a supply glut that has depressed U.S. crude prices compared to Europe's Brent crude.

The premium for Brent crude futures fell under $17 Tuesday.

Investors will be looking ahead to weekly data on U.S. oil and fuel stockpiles from the U.S. Energy Information Administration, due Wednesday at 10:30 a.m. EST, for further signs of oil demand.

Oil stockpiles are expected to rise by 2.7 million barrels, according to a Dow Jones Newswires survey of analysts. Gasoline stockpiles are seen rising by 200,000 barrels, while stocks of distillate, which include heating oil and diesel, are seen falling by 900,000 barrels.

The American Petroleum Institute, an industry group, is due to report its own stockpiles data at 4:30 p.m. EST Tuesday.

Front-month February reformulated gasoline blendstock, or RBOB, settled 3.86 cents higher at $2.9734 a gallon. February heating oil settled 4.76 cents higher at $3.1092 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Declare War On Climate Change. We demand President Obama and Congress accept Climate Change as an enemy of the people.

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The Demand for Energy and Steel

There’s a good story going on in Lorain, Ohio, a steel town that has seen ups and downs. Thanks to the surge in production of energy from shale in neighboring Pennsylvania, the current trend is decidedly up.

John Wilkinson, who manages U.S. Steel’s Lorain tubular operations facility that makes steel pipe, says good years (2007-08) were followed by the economic downturn in 2009. Layoffs were ordered. Shale has played a big role in turning things around, building demand for steel products including casings to line wells and extraction tubing. Wilkinson:

“Now with the upturn in the economy, the things we’re seeing from the Marcellus Shale and the increase in production, we’ve had the opportunity to recall almost all of those people and actually hire an additional 300 people in the last 18 months.”

Check out this video for a sense of the hope and opportunity that’s come to Lorain through the shale/hydraulic fracturing revolution:

It’s not just one community or one company. Shale plays around the country are generating energy, jobs and economic growth.

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‘The Laws of Supply and Demand Do Work’

Back in February we ran the chart below. Then, at a congressional hearing last month, API President and CEO Jack Gerard referred to it in testimony urging lawmakers to consider the effects of increased U.S. oil production on global crude oil markets. We’ve written about the effects of increasing domestic supply here, here and here.

Last weekend the Washington Post took issue with the notion that the basic laws of supply and demand apply to crude oil like they do other globally traded commodities. The article noted Gerard’s congressional statements about supply and market expectations and dismissed them:

"As Gerard told it, 'the price of crude oil over three days dropped $15 a barrel and continued to move down.' The lesson, he said, was that 'markets are driven on a global basis by expectation. If the market heard the president of the United States say ‘I’m serious about producing my vast energy resources,’ you will see an impact in the market.' The tale was an indictment of President Obama. But there’s one hitch, say oil experts. It doesn’t hold together."

The Post attributed the crude price plunge to other factors:

“The dizzyingly high (oil) price, and fears of an economic slowdown, triggered a wave of selling by oil investors or speculators, in part because of margin calls. The prices of equities as well as commodities such as corn and aluminum, unrelated to offshore drilling, also fell, reinforcing the argument that oil’s fall was a symptom of broader market conditions.”

Interesting, but we couldn’t help noticing the quote from one of the oil experts in the article’s very next paragraph:

“'There is no doubt that expectations are a part of price movements,'” says Ed Morse, head of commodities research at Citigroup.

Well, that looks like Morse basically just blew away the article’s argument that the supply/market expectations linkage “doesn’t hold together.” To be fair, Morse went on to say he thinks credit problems and the impending recession had more effect on crude prices than energy policy statements. But there’s no escaping the fact that the story’s own source acknowledged that market expectations – about supply changes, national policy shifts, political resolve – have something to do with crude oil “price movements.” API Vice President for Policy Analysis Kyle Isakower:

“We do not argue whether there was … an oil price bubble in July 2008. However, to claim that the signal sent to the market by lifting the presidential moratorium had nothing to do with the drop in prices that began the very next day stretches the limits of credibility. Given the concern many policymakers place on speculation in oil markets, here is a perfect example of a signal being sent to the market that changed traders’ thoughts about future prices.”

Supply and demand indeed applies to the crude oil markets. Increasing supply will exert downward pressure on the price of crude, which is critical since crude currently accounts for about 76 percent of the price we pay at the pump.  WTRG Economics’ James L. Williams:

“If we increase supply in the U.S., will there be an effect on crude markets? Absolutely. … If the U.S. increases domestic production, over time that’s going to bring prices lower. … The laws of supply and demand do work, even if it’s not as obvious as it should be. If we produce more, the price will be lower than it would have been otherwise. … I don’t care who increases oil production, it will decrease oil prices.”

Supply matters. Next.

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